Good afternoon, ladies and gentlemen. Welcome to this Ordinary General Meeting of Photocure. My name is Jan H. Egberts, and I'm the Chairperson of the Board of Directors of Photocure. I hope this meeting finds you all well in these difficult times, and that you and your loved ones are in good health. Unfortunately, due to the COVID-19 epidemic, it was a little bit more difficult to schedule this meeting, and I was unfortunately unable to travel to Oslo, so I have to do it remotely. And I think the same applies to Dan Schneider, our CEO, who is dialing in from Princeton, New Jersey. Besides myself, I'd also like to introduce now our CFO, Erik Dahl, who is at the office of Selmer. Also there at the office of Selmer is the Chair of the Nomination Committee, I understand, Hans Peter Bøhn. Mr.
René Herskedal from Nordea is the person who will take charge with the counting of the votes, and he's also at the offices of Selmer. Then finally, the people from Selmer are there to make the minutes of the meeting. A number of votes have already been cast in advance by proxies. The voting instructions were received as part of the invitation for this meeting. The first thing is to ask René Herskedal to present the votes that have been, the proxy votes that have been submitted.
Yes, and the company has totaled 24,120 shares. The company has 16,624 own shares, so voting rights shares is 24,093,396. Attendance here today on advance voting and attendance is 3,443,037, and that's then 14.29% of the voting rights shares.
Okay. Thank you very much. The first item to vote for is the election of the Chairperson of the meeting. Subsequently, we also need to appoint a person to co-sign the minutes. It was suggested that I chair the meeting as Chairperson of the meeting, and I want to see if that's acceptable to everyone on how it was voted on. René, can we get the votes for that?
On item one and two, there was no voting, so that's just.
There's no voting. I'm sorry.
Yeah.
Yes. Okay, so hereby, I have been appointed Chairperson of this meeting. Then, also, we need to appoint a second person to co-sign the minutes, and we propose to ask Erik Dahl to co-sign the minutes. As there are no shareholders available in the room, typically we ask a shareholder to co-sign the minutes, but because of the special situation, there are currently no shareholders in the meeting, so hereby, I'd like to ask Erik Dahl to co-sign the minutes. These are kind of the introductory comments I wanted to make. Now, we need to go to item four, the approval of the notice and the agenda. The notice was mailed to everybody at all known addresses, so the general meeting has been convened in accordance with the Articles of Association and the rules that apply to listed companies in Norway.
So therefore, we assume that no one has any objections to this notice. I'll leave a minute quiet, and then anybody can react. At this stage, we have completed, given the fact that there are no objections, at this stage, we have completed the constitution of the general meeting. We will now proceed with the matters on the agenda. As the next item, I'd like to ask our CFO, Erik Dahl, to give a short presentation regarding the financial results over 2019. Erik, do you want to go ahead?
Thank you, Jan. I'll go ahead, and I'm here together with Geir Moen, our partner at KPMG as well. I'm now at slide number three on the presentation, overview of the annual report. It's very much the same concept, the same layout as we had in 2018, going from the year in brief down to and including alternative performance measures. New this year is that we have a separate release on the ESG report. ESG stands for Environmental, Social, and Governance, also called or named the Sustainability Report by some people. Next year, that part of the annual report will be included in the document Annual Report. I'm moving to slide number four, looking at segment performance. We're looking at two segments for the company: commercial franchise, which is Hexvix Cysview, our product, and then we have the development portfolio, which mainly relates to Cevira.
Within the commercial segment, we see we have a very strong 2019. We have a revenue growth of about 23% for the segment, driven very much by US with a 55% revenue growth in local currency, meaning US dollars. It's a 43% growth driven by unit growth. We have also growth in Nordic as well as partner revenue. We have a 3% growth in Nordic and 7% growth among partners. We have an EBITDA for the segment, NOK 7.3 million, a small decline from 2018, but this is driven by one-off milestone revenues that we did get in 2018 and that we did not get in 2019. Development portfolio, very much driven obviously by Asieris and the license agreement with Asieris for Cevira. We have a revenue in dollars of $8 million, of which $5 million was paid in 2019.
Total EBITDA for the company is NOK 58.9 million, improvement of NOK 70 million from 2018, so it's a very strong year financially. Going on to the next slide, consolidated income statement. Total revenue, NOK 282 million. It's up NOK 100 million from 2018, or 55%. Operating expenses is up NOK 25 million, so it's 14%. The revenue increase, NOK 100 million, is driven by Hexvix Cysview with about NOK 40 million. It's driven by Asieris and Cevira of about NOK 65 million, and then we have a small decline of NOK five million on milestones and others. OPEX, I said 14% increase for the year. OPEX is driven by investments in US commercial operations as well as one-off expenses related to Cevira and Asieris. And we see during the year that we have a decline in the growth rate on the OPEX. EBIT, NOK 42.7 million, improved NOK 80 million compared to last year.
Drives the earnings before tax of NOK 45.9 million compared to -NOK 36.7 million in 2018. Tax, we had a tax expense in 2019. This is all non-payable tax. It's movements to the tax asset, as you will see from the balance sheet. So we have net earnings, NOK 31.8 million versus -NOK 36.7 million in 2018 for the company. Strong results, driven by accelerating revenue growth, Hexvix Cysview, 23%, driven by declining expense growth, 14% for the year, and driven by Asieris revenue, about NOK 65 million. Next page, looking at cash flow. I'm looking again at full year operational cash flow, NOK 20.7 million compared to -NOK 24 million in 2018. Asieris drives a lot of this. It's $5 million from Asieris in the operational cash flow. And we also have improvements on Hexvix Cysview operations.
We have investing cash flow of NOK 0.6 million, 2018 negative NOK 1.1 million, and we have financing cash flow of negative NOK 2.8 million compared to positive NOK 2.7 million in 2018. Cash balance at the end of the year, NOK 125.3 million. This leads us to the balance sheet. A couple of comments. Total assets of NOK 257.4 million. This leaves cash with about 50% of the total, NOK 125 million. We have inventory and receivables, so NOK 61.6 million. It's increasing from 2018, mainly due to the $1.5 million from Asieris that we have as a receivable, short-term receivable at the end of 2019. We have non-current assets, including investments, mainly driven by the Cysview Phase III project. It's declining significantly, which is driven again by the amortization of that specific project. Tax asset, NOK 38.3 million, we see it's declining significantly from 2018, which was NOK 52.4 million.
Then we have other items, NOK 18.5 million, which is mainly the long-term part of the receivable at Asieris. Equity at the end of the year, NOK 208.6 million, so that's 81% of total assets as the last many years, no interest-bearing debt. Solid balance sheet.
Good. Good. Thank you very much. Indeed, very positive results for 2019. Well done. Next, I'd like to move formally to the item, the approval of the annual accounts and the report for the financial year 2019. It's the first matter. And this includes actually four different sections in a way: the Board of Directors proposition in the annual accounts for Photocure and for the group, the statements from the Board of Directors and the CEO, the third item is the Board of Directors report on corporate governance, and finally, the auditors report. The company auditors, KPMG, is available for any questions, so I kind of want to pause a little bit and see if there are any questions from the people from KPMG. Does anybody have any questions?
This is Erik speaking. I have no questions from the audience.
Okay. Thank you. Therefore, I'd like to propose that the annual accounts and the report for 2019 for Photocure and the group are approved by the general meeting. And I want to see if any votes still come in, and otherwise, I'll ask René to let us know what the results are.
There are no against. There's just 8,019 shares abstain, and so the item is approved.
Good. Thank you. The next item on the agenda is item number six. It's the approval of the declaration on salaries and other remuneration for senior management. And this includes two components, and we vote separately. The first component is an advisory vote, and that is basically in advisory guidelines. To take a step back first, the principles of the declaration regarding the allocation of shares, subscription rights, and other items are binding on the Board of Directors when approved by the general meeting, and it's the second item. And we basically are acting in compliance with the Public Limited Liability Companies Act that's active in Norway. So again, there are two items to vote on. The first one is the preparatory or advisory guidelines.
The board would like to suggest to the general meeting to endorse the preparatory guidelines in the board's declaration pursuant to section 6-16A in the Public Limited Liability Companies Act. Can we get a vote for that?
There are 65,777 that's against and 8,019 abstain, so item 6A is approved.
Okay. Thank you very much. The next item is section 6B, which is a binding guideline to the Board of Directors. And the board, I can suggest, also to the general meeting, endorses the binding guideline in the board's declaration pursuant to section 6-16A of, again, the Public Limited Liability Companies Act. René, can you get a vote for those?
There are, on 6B, 415,624 that's against and 8,019 abstain, but it's approved.
Okay. The next item is the presentation of the company's state of affairs by the CEO, now CEO Dan Schneider, who, unfortunately, is also unable to travel to Norway, so he is dialing in from Princeton, New Jersey, which is our US head office. I'd like to give the floor to Dan.
All right. Well, great. Thank you, Jan. Good afternoon, everyone. We'll move to slide 10. Slide 9 is the introduction slide. Slide 10 talks about our mission to deliver transformative solutions which improve the lives of bladder cancer patients worldwide. It's a four-stage process, Accelerate, which you have witnessed throughout the last 12 months in driving the breadth and the depth of Hexvix Cysview in the current accounts and new accounts, expansion, expansion into other geographies around the world, as well as enhancing the value of Hexvix Cysview through lifecycle management. Stage three is acquisition, which could be a partner and in-license that is synergistic to our current asset, such as Combat Medical's HIVEC system, which we currently co-promote or promote for Combat Medical in the Nordics, and then eventually to Transform, and that's acquisitions and building a pipeline in a broader portfolio overall.
We believe this platform will be the foundation for transformative deals and value growth over the long term, and I think we have seen growth over the last 12 to 24 months. If you move to slide 11, we recap some of the past 12 months' highlights that's contributing to our overall strategy implementation. First, probably one of the most exciting developments was the regaining worldwide rights to Hexvix, which we announced about 30 or so days ago. We expect to be EBITDA accretive from the full year 2021, and after the transition year, we're targeting growth rates around 30% annually in the current Ipsen territories. We also announced last summer the partnership highlight, Cevira Deal, which is an approximate value of over $250 million through development and commercialization. Asieris has already paid us $6.5 million through quarter one, and that is in accordance with the license agreement.
As Erik mentioned earlier, we still have another 1.5 million to book, hopefully later on this year if they meet their next milestones. They are well on their way and excited about that development of that product, fantastic product. From a business growth highlights perspective, we had 238 installed base of rigid and flexible blue light cystoscopes. 65 were installed in 2019, which is an all-time high. We installed 15 in Q1 of this year, which puts us on pace with last year's installations, with the caveat that COVID will have an impact at the rate. However, we're still seeing installations, particularly large pipeline accounts.
We have taken some cost reduction initiatives, mostly in the line of expenses around travel and programs that happened during these lockdown or shutdown periods, such as AUA and EAU. Those costs that are associated with those congresses, we did not need to spend. So we'll have some level of cost reductions. But we are prepared, which is a main point of this, is prepared for when the restrictions lift to then accelerate the business once again and regain the momentum we've had. From a product highlight standpoint, falling under the expansion lifecycle management piece, we did receive the U.S. patent for neoadjuvant therapy for patients scheduled for cystectomy, expires in 2036, further strengthening our IP position on our core assets. Slide 12. Slide 12 talks a lot about the key enablers globally now that are in place for us to be successful.
We talk about the approval both in the surgical and surveillance setting, the acceptance on all major and local guidelines, AUA, EAU, SUO, and all the local and regional guidelines across the world. We have access for permanent and favorable reimbursement in the U.S. It continues to be a work in progress as we continue to strengthen our economic value. Activated awareness, patient groups and patient advocacy groups partnering with us, and the demand continues to grow. And acceleration in our business, the commercial investment we've made over the past 12 months by expanding the geographic footprint and, I would say, upgrading the overall commercial engine of the organization to do much better.
To the left is a graph showing the relative penetration rates, and I use the word penetration, not market share, because we basically are competing against a standard care white light, which has been out for 30, 40-plus years. So we see penetration rates very high in the Nordic countries, which we were direct in since the very beginning of time. In the U.S., we just recently got all the key success factors in place, and we're starting to see accelerated growth. So our penetration rate remains somewhat low, although the opportunity remains quite high. We've also separated Europe and DACH countries. DACH, the German-speaking countries, actually have a fairly decent penetration rate in and around 30%, and the rest of the EU is basically under 5%, with some countries like the U.K. and Spain being near zero.
We think we can bring European penetration rates up to around the Nordic rates over time. Next slide. So this slide on slide 13 talks about the large untapped potential in the European market, worth EUR 150 million. The number of cases are about double that in the U.S. However, the number of surgical treatments are approximately equal. The price of Hexvix is about half that of the U.S. We believe, though, that the opportunity remains quite high with under 5% penetration in non-DACH countries and zero penetration in countries like the U.K., Spain, and Italy, and other parts of Europe. So there's tremendous opportunity to raise the penetration rates to those of the Nordics, and we believe that we have the skill set to do so with our experiences throughout Europe.
The next slide, slide 14, speaks to the explosive and sustainable growth that we have seen in the past 18-24 months. As you can see, we have bent the curve, and it is now on a more vertical move as we moved from 63 million-98 million, 98,000. So we're in great shape. We see this trajectory continuing forward into 2020, minus the COVID impact, which will have some impact here in Q2, hopefully not much longer. Slide 15. This is one of the key performance indicators and speaks to what's fueling that growth behind the scenes. I want to point out on this slide, in 2012, when we launched the product in the U.S., of the 23 scopes or accounts that were placed in 2012, 17 of them were from clinical trial sites. So in fact, we only placed six scopes in 2012.
Relatively, throughout those years, we were basically in the teens in terms of placement, around 15, 16 scopes. If you look, the majority of the scopes have been placed in the last 24 months, and this is the fuel of our growth that you saw on the slide prior. Here in Q1 2020, we placed 15, which is about a quarter of all of 2019, so we were on pace at the same rate as the prior two years. Moving to slide 17. This is the sustainability report that Erik had spoke to briefly before. It's environmental, social, and governance, also known as corporate social responsibility or sustainability reporting. We had dialogues with four of these stakeholders. Due to COVID, we did not engage with the government authorities or civil society and will continue this process. This is our first report ever. It's a standalone initiative.
We incorporate it into future annual reports. We had dialogue with employees, customer patients, suppliers, and investor shareholders. It is a dependent relationship between Photocure and these stakeholders. It has been reviewed and approved by the board of directors, and as I said, it is also in accordance with GRI and Euronext reporting guidelines, so at the highest standards. Slide 18 is the five material topics that are addressed: product quality and safety, value chain responsibility, working environment, business ethics and transparency, and data protection and IT security. We're happy to announce or let you inform you that from a product quality and safety, we had zero incidents in 2019, and from business ethics and transparency, we had zero incidences of issues.
With this report for the first time, we're reporting on targets and progress for each material product, and we've set goals for how to improve our work in the future. Going forward, we will work systematically on implementing sustainability targets in our purchasing and value chain activities. We will also strengthen our focus on good working environment and ensure the appropriate channels for reporting concerns are put in place. We're here to improve the lives of bladder cancer patients, and we seek to do so in a both transparent and responsible way. Moving on to slide 20. Slide 20 is addressing the impacts of COVID. We are very optimistic in the rebound. As I mentioned, even after quarter one, we're seeing quite a nice rebound. Many of the procedures throughout the United States, in particular, were postponed.
I think one positive thing coming out of COVID-19 is I don't think this level of postponements and impact on hospitals' treatments will have quite the same magnitude going into the future. I think everyone has learned their lesson on this. But we see Cysview, Hexvix in particular, to have a unique opportunity for hospitals and urologists, and they're seeing it as well. And we see it in two forms. One is after you've postponed these patients, they've had progressive cancer growth during the last two or three months. What better time than to use blue light cystoscopy to find all the cancer and have a complete resection and proper risk stratification of that patient for proper management and surveillance?
The second opportunity that we're also touting is also the fact that because of the hospital's heavy load on resources to treat COVID-19, we believe that many of the physicians are seeing the opportunity to move some of these procedures back into their offices that they've previously depended on hospitals. This is where we see Flex potentially getting a benefit from as we continue to push the product in the market in the US. We are starting to see a return. What came to literally a grinding halt in the last weeks of March, the hospitals are opening back up. Our representatives, salespeople, have access to those hospitals under tighter restrictions, and we're starting to get back in and selling again. Closing with slide 21, again, underscoring our overall strategy and mission: accelerate, expand, acquire, and transform.
We have ambition of worldwide revenues in the range of NOK 1 billion by 2023, with an approximate 40% EBITDA margin in 2023. And with that, I'll turn it over to Jan and any questions there might be. Thank you.
Thank you. Let's open the floor for questions.
This is Erik again. I have one question from the web. The question is, and it's from Jason Barlow. Will restricted hospital budgets due to COVID-19 in the U.S. mean fewer cystoscopes being purchased and therefore slower growth for you in the next 12 months?
Yeah, we still don't have complete visibility into that, but what we do believe is because we're in the cancer space, products and devices will take priority over things that are probably less life-saving. We have not gotten any specific indication that the capital equipment budgets have been necessarily cut. But the process of selling the cystoscopes into the hospitals is a process over time. We also have worked with Karl Storz in this. Because of the COVID impact and resources, Karl Storz is extending financing and financing packages with no payments until 2021, hoping to continue the growth rates that we've all experienced over the last 18 to 24 months. So still not complete visibility, but we're doing everything we can to keep things moving forward.
Good. Any more questions, Erik?
No further questions. No.
Good. Thanks again. Great results, as you saw. Also the board is very pleased with the performance of the company over the past year, and I'd like to thank Erik and Dan and the rest of the team for their incredible energy, particularly in these difficult times. I'm moving on now on the agenda. I'm moving to item 8, remuneration of the board members and the members of the nomination committee. As you can have read, the nomination committee has recommended the compensation for the directors. For the chairperson, it has been recommended NOK 520,000, and for each of the regular board members, NOK 300,000. In addition, for the government nomination committee, it's proposed that NOK 35,000 for the year, for the chairperson, and NOK 15,000 for the regular member. In addition, board members who travel internationally, particularly from the US, will get extra compensation for travel time away from home.
So these items are all get voted on in one vote, and that's vote number eight on your list. Can I move again to René to give us the results?
Yes, and against, you have 21,747, and abstain is 8,019, so the item is approved.
Okay. Thank you very much. The next item on the list is the remuneration of the auditors. The accrued fees for 2019 amount to NOK 473,000 for the company. And it's kind of made up of two different components. NOK 325,000 is related to the statutory audit, and NOK 69,000 is related to testing services and audit-related services. And then finally, NOK 78,000 is related to audit services. So the total is NOK 473,000, of which NOK 325,000 is related to the statutory audit. Can I get the vote on that item, please?
Yes. And then it's 44,430 against and 8,019 abstain. So the item is approved.
Good. Thank you. The next item on the agenda is the election of the Board members. Not the way my mother taught me, but the first person on the name is my own name, voting for Jan H. Egberts.
200 votes against and 8,469 abstain. So it's approved.
Good. Thank you. The next person on the list is Grannum R. Sant, our urologist from the U.S.
And there we have no votes against and 8,469 abstain. So it's approved.
Good. The next person, next proposal for the board members is Johanna Holldack, a German physician.
And the votes there is none against and 29,546 abstain. So it's approved.
Good. Thank you. And then there are two new board members, but before I propose those, I want to thank the departing board members for their energy and dedication to the company over the last years, particularly Tom Pike, who has been here for a very long time and was particularly instrumental when we were focusing more on the skincare and women's health arena. And then Gwen Melincoff from the U.S. and Tove Andersen , who has only been with us for one year, but unfortunately, because of another position, she was unable to continue. So I really particularly like to thank Tom, Gwen, and Tove for their energy and their dedication. So having said that, I'd like to move to the two new board members. The first one is Anders Tuv, who was proposed by the nomination committee. Can I get the vote for Anders?
Yes. There are 44,030 against and 8,469 abstain. So the item is approved.
Good. Thank you. And the next individual also a Norwegian. The last two are both Norwegians. Anne Worsøe . Not sure how to pronounce it, to be honest.
The votes there is 65,107 against and 8,469 abstain. Approved.
Okay. So all the board members have been approved. Thank you for your support, and we know what needs to be done. The next item on the agenda is item number 11. Excuse me. And that's the election of the members of the nomination committee. So the nomination committee has proposed the following three individuals. As of last year, the same as last year, Hans Peter Bøhn, again, as the chairperson of the nomination committee. So we'd like to propose that he gets reelected in that position.
The total votes are 200 against and 9,569 abstain. Approved.
Yeah. The next name, next person is Lars Viksmoen.
And there we have none against and 30,646 abstain. So approved.
Yeah, and the third person is Jonas Einarsson.
And the total there are 21,077 against and 9,569 abstain. So it's approved.
Yeah. Actually, in case there are some questions, the nomination committee, Hans Peter Bøhn, is available in the room. So I want to see if there might be any questions towards him since he's there.
There are no questions from the web.
Okay. Thank you. Okay. The next item, item number 12 on the list, is the notice period for calling extraordinary general meeting. Pursuant to the Norwegian Public Limited Liability Companies Act, listed companies like ours may decide that the general meeting is in effect until the next annual general meeting, so a meeting like this, that the notice of the extraordinary general meeting may be sent no later than two weeks prior to such meeting being held instead of the normal period of three weeks. So essentially, a shorter period to call an extraordinary meeting. And the board finds it appropriate that the general meeting makes such a resolution to facilitate more expedient case handling if required. So in essence, that we shorten the period, the statutory period, that's normally three weeks to two weeks. Can I get the vote for that, René?
50 votes against and 9,569 abstain, so it's approved.
Thank you. The next item on the list is the board authorization to acquire its own shares. The board's authorization from the general meeting, it gets it on an annual basis, to acquire its own shares, which also includes the acquisition of charge by agreement in own shares. The board has proposed that the authorization is renewed. It's an annual renewal. The proposal entails that the company may, in one or more rounds, acquire shares with a total nominal value of essentially NOK 1.2 million. The highest and lowest purchase price payable for these shares, pursuant to the authorization, is set at a maximum at a ceiling of NOK 150, so no higher than NOK 150, and a minimum of NOK 50. Excuse me, NOK 0.5. It's proposed that the authorization is valid until the next ordinary general meeting in the spring of 2021, so hopefully again in May.
However, if that meeting is, for whatever reason, delayed, it will be no later than June 30, 2021. The shares that get acquired pursuant to this authorization shall either be deleted in connection with a later reduction of the registered share capital or applied as remuneration for members of the board for incentive schemes or consideration shares with regard to the acquisition of the business. So in short, it's to authorize the board to issue up to 1.2 million shares at a price range somewhere between NOK 0.5 and NOK 150. And that will be valid till the next AGM, next annual shareholder meeting, hopefully again in May of next year. Can I get the vote for that?
It's 1,070 against and 45,199 abstain, so it's approved.
Okay. Thank you. The next item on the agenda is the board's authorization to increase the share capital. The board's current authorization from the general meeting to implement share capital increase in the company as far as at the AGM, today's meeting, essentially, so the board proposes that the authorization is renewed. There are three authorizations present in the notice, which shall be dealt with separately, and so we know if the first one gets approved, we're not going to vote on the second and the third one, so again, this is to authorize the board to issue shares, and the first one I'd like to vote on is to authorize the board to issue up to 15% of the share capital, and again, we have had it every year up till now. Typically, it was 10%.
We'd like a small extension of that, an expansion, excuse me, particularly in light of the recently announced transaction. Therefore, we propose authorization to the board of 15%. Can I get the vote for that?
That's 380,863 against and 1,150 abstain. So it's approved.
Approved. So we don't need to vote on 14-2 and 14-3 since 14-1 has been approved.
This is Erik Dahl. I think we need to vote on 14.3. It's related to the company's incentive program.
Excuse me. I just figured it out. 14.3 is the authorization to the share capital increase according to the company incentives program. So that's basically that allows the board to issue shares for incentive schemes that have been issued prior. So this authorization entails that the board will be authorized to execute one or more share increases by issuing in total about 500,000 shares with a nominal value of 50, a nominal value of 0.5 NOK. The amount by which the share capital may increase is 250,000 NOK. So again, this is for the management incentive program. Can I get the votes on this?
Yes. There are 424,063 shares that's against and 1,150 that abstain. So it's approved.
Okay. Thank you very much. We have now been through the entire agenda. I'd like to thank you all for your attendance and, again, your support over the past year. I'd also like to thank the management team for their incredible energy and dedication. I think we had a good year. Hope we're going to have an even better year the upcoming year. Now we're going to look at the acquisition of the Ipsen business. So that's going to be a major milestone for the company. So please stay close. And again, hope you all stay healthy and hope you have a good summer. Thank you very much and goodbye.